U.S. Treasury Secretary Lectures Europe About The Stupidity Of “Austerity”
Jack Lew, the new U.S. Treasury Secretary, is in Europe this week.
He's lecturing European leaders about the lousy job they're doing fixing the overall European economy, which remains in a recession.
Specifically, Lew is saying that Europe should ease the "austerity" policies that have helped destroy the economies of Greece, Portugal, the U.K., and many other European countries. These government spending cuts, which were designed to reduce budget deficits, are instead just hammering some of Europe's economies. Because economic contraction leads to less tax revenue, the policies are also failing to do what they were supposed to do -- cut budget deficits. The U.K.'s deficit, for example, is almost as big as it was during the worst of the financial crisis.
So, yes, Europe should reduce or eliminate its misguided "austerity" push and pursue "pro-growth policies," as Lew is suggesting.
Related: Cyprus Debacle Shows Not All Euros Are Equal
But it's still odd that Lew is taking this message to Europe when the United States is in the midst of an austerity push of its own.
The U.S. government "sequester," which went into into effect last month, is cutting many government spending categories by 5%. These cuts are indiscriminate and across the board. Economists agree that they will hurt the economy and increase unemployment (or at least reduce the rate at which unemployment drops).
So, why is Lew taking his anti-austerity message to Europe before he shouts it from the rooftops here?
Related: The Eurozone Is Not About to Unravel: Zachary Karabell
And more importantly, why will European leaders give the new U.S. Treasury Secretary even a polite listen when his recommendations are the height of hypocrisy?
Reuters has just reported that French Finance Minister Pierre Moscovici has canceled a meeting in Paris with Lew that had been scheduled for Tuesday. No official reason for the cancellation was given.
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